LexTHE DEPUTY COMMISSIONER OF AGRICULTURAL INCOME TAX AND SALES TAX, CENTRAL ZONE, ERNAKULAM versus M/S. KOTAK & CO., BOMBAY, ETC. ETC.
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THE DEPUTY COMMISSIONER OF AGRICULTURAL
INCOME TAX AND SALES TAX, CENTRAL ZONE,
ERNAKULAM
.
v .
M/S. KOTAK & CO., !JOMBAY, ETC. ETC.
April 3, 1973
(K, S. HEGDE AND H. R. KHANNA, JJ.]
Central Sr.ies Tax Act 1956--S. 5(2) read with Art. 286 of the Consti-·
uuion.
A.~essee Company sold to bu,ver · ilr the course of import--
JVhether an inter-State sale.
~·.
The respondent was engaged in the supply of foreign cotton to texti!e-
milis. in South India on the basis·of import.Jic.cnces issued to the mills-.
3uthori!~Og import of foreign cotton· by them.. The firm supplied cotton
to the mills on the basis of specific written
contracts. One of the
co.rrditicns in the -contract is that _the goods imported· should not under
any cir:"Umstances, be diverted· fiom its d.:termined destination, i.e. the
mills. _ Secor.dly~ the relative. shipping docum~nts ·were issued
by
the-
foreign seHer in the names of the respective mills and not in the name-
Of the assessee-firm.
Again;_ the import licences issued to 'the
mills.
authorise the mills to import the goods; and o:n the reverse
of. these·
licences is stated that the goods for the import of which the lice:nces.
\vere grante-d should be the property of the licensees at the time of
clearance through the customs. Still further, th~ _letters of authorisation
isstied by the Gover,ament authorising the assessee-.firm · to import the
cotton show that the assessce had to do it purely as
an agent . of the-
licensces hoth at the time of th.e clearance through· the · customs
and
subsequent th{!reto. The firm entered into a contract with M/s. ~faha-
laxmi Cotton Mills on 20-3-1964. · According to the" respondent, by the
contract entered into with the mills, the quantity of cotton agreed to be·
supp;ied to the mills was ~pecified as also its quality and places from
where it ""' to be imported. The price was fixed on C.l.F. Cochirr.
term. Payment was to be made by the mills to the firm against the.
document. The other conditio;r.tS governing the contract were laid down
on the reverse of the contract form, the most important clauses
in
ihc conti·act \Vere that the C!Ontract was C.I.F. in nature notwithstand- ·
ing anything to the contrary mentioned i;n the· contract. . The price was·
subject to variation depending . upon the import duty, . freight rate,.
iiisurancc premium and exchange rate. Jt was further provided by th.e·
l\:IiHs that the contract_ was irrevocable and that any differences betwee;n ·
the parties had to be resolved through arbitration etc._ The question_ was
\Vhether thi! sales made to the mills affeCted in this Country occasioned
the import. The Sales Tax Officer, as well- as the Appellate Assistant'
CoirJmissioner, held that the sales in question were intra-state sales and'
therefore, the assessee was liable to tax.
·
On appeal, the Sales Tax Tribunal held that the assessee's case fell"
within s. 5(2) of the Central Sales Tax Act, read with Art. 286 of the
Constitution and -the Hi.!dl Court on revision, affirmed the decision
of-
the Tribunal.·· Before this Court it was contended by the appellant that·
the. sales were intra-state sales . and as Mb, the assessee was liable to-
tax:.
D~smissing th.e_ a~e?ls,_ ·.
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· . HeLD : · The present· case falls within the. rule laid down. by . this
Court in K. G. Khosla & Co. v. Deputy Commissioner of Co1nmerciat·
ll84
SUPREME COURT REPORTS
[1973] 3 S.C.R.
Taxes, (1966] 3 S.C.R. 352, wherein it was held that the saies in ques-
tion occas;oned the import and as such it was exempt under s. S (2) of
the
Central Sales Tax Act, 1956 which says, "A sale or purchase
-Of goods shall be deemed to take place in the course of the import of
goods into the territory of India only if the sale or purchase either
occasions such import or is eJfected by a transfer of documents of title
to the goods before the goods have crossed the customs frontiers
of
India." f887GJ
Coffee Board, Bangalore v. Joint CorrlJriercial Tax
Officer,
Madras
<1mi An<>ther (1970] 3 S.C.R. 147, referred to aod distinguished.
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1889 to
1891 of 1970.
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Appeals by certificates from the judgment and order dated c
October 28, 1969 of the Kerala High Court at Emakulam in
T.R.C. Nos. 40, 41 and 42 of 1968.
Civil Appeals Nos. 1892 to 1896 of 1970
Appeals by certificates from thExcerpt shown. Read the full judgment & AI analysis in Lexace.